SpaceX announced on Tuesday a new partnership with Cursor, the San Francisco-based AI coding company.
The deal isn’t a straightforward acquisition, at least, not yet. According to a post by SpaceX via X, the agreement gives the rocket company the right to acquire Anysphere, Cursor’s parent company, later this year for $60 billion.
This structure essentially places a $10 billion breakup fee or collaboration price tag on the table if SpaceX decides not to proceed with a full buyout.
Cursor, founded in 2022 by four MIT graduates, has experienced a meteoric rise. The San Francisco startup crossed $100 million in annual recurring revenue in under two years and, by November last year, had reached a valuation of $29 billion after raising $3.4 billion from investors including Thrive Capital, Andreessen Horowitz, and Accel.
More recently, its annualized revenue surpassed $2 billion, according to the Financial Times.
But growth had hit a ceiling. “We’ve wanted to push our training efforts much further, but we’ve been bottlenecked by compute,” Cursor said in a blog post announcing the partnership. The SpaceX deal, the startup added, will allow its team to “leverage xAI’s Colossus infrastructure to dramatically scale up the intelligence of our models.”
CEO Michael Truell, for his part, sounded optimistic. “Excited to partner with the SpaceX team to scale up Composer,” he wrote on X, calling it “a meaningful step on our path to build the best place to code with AI.”
The road to a $1.75 trillion IPO
SpaceX has confidentially filed with the SEC for an IPO that could happen as early as June, and is expected to be the largest IPO in history, potentially valuing the company at $1.75 trillion.
By folding Cursor into its ecosystem, SpaceX is doubling down on its identity as an AI powerhouse, not just a rocket manufacturer. Musk has already merged his AI venture, xAI, into SpaceX earlier this year.
However, internal documents suggest the path hasn’t been entirely smooth. According to the Financial Times, while SpaceX’s Starlink satellite business saw an operating profit of $4.42 billion last year, the xAI division reported a loss of $6.4 billion in 2025.
Winning the coding war
The deal also signals a tactical shift. While Musk’s xAI has struggled with employee departures and a chatbot, Grok, that Musk himself admitted was behind in coding, Cursor has been winning over developers.
The New York Times reports that “xAI was not built right first time around, so is being rebuilt from the foundations up,” a sentiment Musk shared after hiring two former Cursor leads in March to help fix the ship.
By securing Cursor, SpaceX isn’t just buying software; it’s buying a lead in the race against rivals like Anthropic and OpenAI, both of which have been aggressively launching their own automated coding tools.
Also read: Elon Musk says an AI-driven economy may require universal high income as automation reshapes jobs, wages, and wealth distribution.